In Warband there are mods where you can build your castle,town from zero,Is it hard to make provinces,and for that provinces reserved places to make castle,town.Besides that in every province reserved place to have N castle/castles,N town/towns,for ai you could make several places to birth of settlement,so no need to think about random,and Settlement system-when plundered,robbed,fired by enemy faction,bandits et cetera,settlement loses population,slowly demolishes,looses rank,for example-plundered town to castle,castle to fortified village,village to demolish,and than,after few time in reserved place rises village,or village becomes castle,with minimum number of settlements in province.So you have already built settlements,and player can build his own,if number of settlements not exceed and he have money,confidence,trust of some amount of people.